Profits halved at bingo operator

Nov 22 2007 by Our Correspondent, Western Mail

PROFITS at the UK’s third largest bingo operator tumbled yesterday after “unprecedented turmoil” caused by the smoking ban and new gambling laws.

Top Ten Holdings, which has 38 clubs across Wales, the Midlands and the North-West, saw pre-tax profits fall by more than half to £381,000 in the six months to September 30.

The Hertfordshire-based group – hit by smoking bans and new restrictions on gaming machines introduced in September – said it would only be “marginally profitable” in the second half of the year if the tough conditions persisted.

In October larger rival Rank, owner of the Mecca bingo chain also warned of slumping revenues since the 2005 Gambling Act came into force two months ago.

Investec analyst Matthew Gerard expects Top Ten’s full year pre-tax profits to be £500,000, compared to £2.8m previously.

He said, “We are concerned trading could deteriorate further in colder weather.”

Shares in the St Albans firm, which began the year at 87.5p, slipped 5% to a new record low of 38p today.

Top Ten chairman Sir Aubrey Brocklebank said, “Average customer spending levels and club admissions remain very unpredictable and it is difficult to discern any clear trends.”

The company is riding out the double impact of the bans and new laws with a cost-cutting plan to reduce overheads. It has also sold five less profitable clubs to lower its debt.

The benefits of the savings should be felt in the first half of the next financial year.

Top Ten called for an overhaul of “perverse” tax laws which bingo operators claim unfairly penalises the sector.

Bingo participation fees are subject to both 17.5% in VAT and 15% gross profits tax (GPT), although bookmakers are only subject to the GPT.

Top Ten has joined other operators in lobbying the Treasury for a change in the rules.